American International Group Inc will accept up to $5 billion in losses from sales of investments from a dozen insurance units after they suffered $13 billion in writedowns linked to the collapsed subprime mortgage market.
The New York-based insurer will boost its previous commitment to take up to $500 million in losses, Christopher Swift, vice president for life and retirement services, told Bloomberg. He also added that AIG would add additional capital to some of the subsidiary firms.
Losses in the subsidiaries were factors that led ratings agency Moody's to downgrade AIG's credit ratings.
The writedowns in the company's securities-lending portfolio were part of a previously announced $38 billion in asset value reductions the company reported during the last three quarters.